There's no such thing as bad publicity.
Let's look at this from an investor's perspective.
USD14 MM was put into a bank account, because people believed in Meerkat's founders. The founders achieved a media buzz that's admirable. The investors aren't investing in Meerkat, the product, the investors are investing in the people behind Meerkat. Unless the investors signed a really crippling term sheet (highly unlikely), there's nothing to stop Meerkat (the company) from pivoting its product, utilising its fame and the media shit storm, and taking things to the next battleground (away from the battle that is lost to Periscope).